ADB trims Asia growth forecasts on China slowdown

A vendor takes a nap at a wet-market in Shanghai, on July 15, 2013. China's slowing economic growth is weakening momentum throughout the rest of Asia, the Asian Development Bank said on Tuesday as it revised down its forecasts for the region.
(AFP)

Asian Development Bank (ADB) President Takehiko Nakao, pictured during a visit to India, in Greater Noida, some 40 km east of New Delhi, on May 5, 2013. The bank has lowered its inflation forecasts for developing Asia to 3.5 percent this year and 3.7 percent in 2014, the latter on par with the 2012 rate.
(AFP/File)

MANILA (AFP) – China's slowing economic growth is weakening momentum throughout the rest of Asia, the Asian Development Bank said on Tuesday as it revised down its forecasts for the region.

A day after Beijing released data showing its economy slowed for a second successive month in April-June, the Manila-based ADB trimmed its outlook for developing Asia this year to 6.3 percent, from 6.6 percent.

In the update to its annual Asian Development Outlook publication, first published in April, the bank also pared its 2014 forecast for developing Asia to 6.4 percent, from 6.7 percent.

The update is only a little better that what the bank described in the report as the region's "relatively sluggish" growth pace of 6.1 percent last year.

"The drop in trade and scaling back of investment are part of a more balanced growth path for (China), and the knock-on effect of its slower pace is definitely a concern for the region," the bank's chief economist, Changyong Rhee, said in a statement.

"But we are also seeing more subdued activity across much of developing Asia," Rhee added.

Developing Asia groups 45 nations or territories from Central Asia through to the Pacific islands, but excludes Japan.

The report cited a marginally better outlook for the advanced economies, particularly Japan.

However, this did not lead to stronger demand for Asian exports, and the first-half economic performance across the region was "unexpectedly subdued", it added.

China said Monday gross domestic product expanded 7.5 percent in the second quarter, following 7.7 percent in the previous three months and 7.9 percent in October-December.

The ADB said it now sees China's economy growing 7.7 percent this year and 7.5 percent in 2014.

Both figures are lower than its April forecasts of 8.2 percent and 8.0 percent. The Asian economic giant grew 7.8 percent last year.

The ADB now expects Southeast Asia's economies to expand 5.2 percent this year, down from 5.4 percent.

It also trimmed its forecast for South Asia to 5.6 percent this year, while maintaining its 6.2 percent projection for 2014.

On a positive note, the ADB said slower GDP growth was helping the region contain inflation., while expanded global natural gas production was also helping suppress energy prices.

The bank lowered its inflation forecasts for developing Asia to 3.5 percent this year and 3.7 percent in 2014, the latter on par with the 2012 rate.